Highlights of the minutes of the Sept 21, 2016 FOMC decision:

  • Policymakers noted there was a 'reasonable argument' for either hiking in Sept or waiting for additional data
  • Voting policymakers generally agreed the case for hiking had strengthened
  • Several voters and non-voters said it was a 'close call' on whether to hike in Sept
  • Many noted few signs of inflation and slow progress
  • Cautious approach could allow labor market to heal more
  • A few expressed worries over reference to postponing hike 'for the time being'
  • Fed sees risks to growth domestically and abroad as tilted to the downside
  • Inflation risks also tilted to the downside
  • Full text

We've heard the 'close call' talk from Fed speakers since the meeting so it shouldn't be a big surprise. Overall, it's a tad hawkish but with Dec already priced at 70%, I'm not sure it can move much higher.

"It was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation," the Minutes said.

Here's the dovish view, which is also something we've heard:

"Members generally acknowledged that labor market conditions had improved appreciably over the past year, evidenced in particular by the solid pace of monthly payroll employment gains. Some of them noted that the increase in the labor force participation rate this year suggested more room for labor supply to expand than previously expected, or contended that the slower progress seen this year in other labor market indicators--such as the unemployment rate, broader measures of labor utilization, job openings and quits, and wage growth--indicated that slack was being taken up at only a modest pace. This view suggested that proceeding cautiously with reducing monetary policy," the Minutes said.

Markets haven't reacted. In general, that's a good sign because it shows that the Fed has clearly communicated where it stands. They've said they want to hike soon but they decided to be patient a tad longer. All signs point to December as long as markets down kick and scream beforehand.